Tariffs, trade wars,and a whiff of stagflation
Signia Invest Insights | March 2025
Market Review and Outlook
Investors will be forgiven for feeling that April Fool’s Day fell on April 2nd this year, now known as “Liberation Day”, which sent shockwaves across financial markets causing US equities to experience their fourth worst two-day decline since WWII, with only the 1987 Black Monday crash, the 2008 Global Financial Crisis, and the 2020 Covid Pandemic seeing larger drawdowns. In short, the Liberation Day “reciprocal tariffs” were extraordinary both in terms of scale and in how they were calculated, with President Trump announcing new tariffs of between 10% and 49% against 180 countries and territories under the Internation Emergency Economic Powers Act (IEEPA), as he declared a national emergency over the US trade deficit. Most global financial markets declined, with the US Nasdaq and Japanese stock markets falling by over -20% to enter technical bear markets.
Back to March, equity markets were already in decline before Liberation Day, with world equities declining -4.1% during the month, led by the S&P 500 and Nasdaq Composite, which fell by -5.8% and -8.2% respectively. European equities did well by comparison on fiscal impulse expectations, extending the run of STOXX 600 outperformance over the S&P 500 to 9 consecutive weeks in March, the longest such streak since 1999. Chinese stock markets were also notable outperformers, with the Hong Kong HSI up 0.8% and China CSI 300 roughly flat during the month, as Chinese policymakers continued their support stance towards the economy and domestic financial markets.
There was also a soft tone in fixed income markets, with the global bond aggregate, and investment grade bonds in particular, declining -0.5% in March. However, high yield bonds outperformed, returning 1.2% during the month as investors continued to bid for yield in a world of tight credit spreads. Given the general risk-off tone and stagflationary fears, gold put in its best quarterly performance since 1986, gaining nearly 20% in Q1 to break away from its previous resistance levels around $2500 all the way back in 2011 to surpass the $3000 mark and post a series of all-time highs. Have investors now thrown in the towel and decided that higher prices should now lead to buying rather than selling? Or has something fundamental changed in the new world order of geopolitical, climate, and globalisation risks?
View this month’s full insights:
Explore the comprehensive analysis of this month’s market review, including detailed performance figures. Click here to delve into the full insights
Important Information
The information set out in this document has been provided for information purposes only and should not be construed as any type of solicitation, offer, or recommendation to acquire or dispose of any investment, engage in any transaction or make use of the services of Signia Invest. Information about prior performance, while a useful tool in evaluating Signia Invest’s investment activities is not indicative of future results and there can be no assurance that Signia Invest will generate results comparable to those previously achieved.
Any targeted returns set out in this document are provided as an indicator as to how your investments will be managed by Signia Invest and are not intended to be viewed as a representation of likely performance returns. There can be no assurance that targeted returns will be realised. An estimate of the potential return from an investment is not a guarantee as to the quality of the investment or a representation as to the adequacy of the methodology for estimating returns.
The information and opinions enclosed are subject to change without notice and should not be construed as research. No responsibility is accepted to any person for the consequences of any person placing reliance on the content of this document for any purpose.
No action has been taken to permit the distribution of this document in any jurisdiction where any such action is required. Such distribution may be restricted in certain jurisdictions and, accordingly, this document does not constitute, and may not be used for the purposes of, an offer or solicitation to any person in any jurisdiction were such offer or solicitation is unlawful.
Signia Invest is a trading name of Arbion Limited. The Signia Invest brand identity and its constituent elements are the property of Arbion Limited. All rights are reserved. Arbion Limited is authorised and regulated by the Financial Conduct Authority (FCA). Our registration details are set out in the FCA Register: Firm Reference No 513138 www.fca.gov.uk/register. Arbion Limited is a private limited company incorporated in England and Wales under company number 07044573 with its registered office located at One Connaught Place, London, W2 2ET.
